Crisis Communication and Bank Runs: A Risk Management Model for Managing Social Media-Induced Financial Panic in Emerging Economies
Abstract
This study examined crisis communication and bank runs as a risk management model for managing social media induced financial panic in emerging economies, using Nigeria as case study. The study was motivated by increasing velocity of bank runs driven by WhatsApp and Facebook misinformation, and by absence of validated model in existing frameworks such as Basel III by Bank for International Settlements 2011 and Central Bank of Nigeria Risk Based Supervision Framework 2020 which do not include social media monitoring. The study integrated five theories into a conceptual framework: Diamond and Dybvig 1983 Bank Run Theory for structural fragility, Prospect Theory by Kahneman and Tversky 1979 for loss aversion, Information Cascade Theory by Bikhchandani and colleagues 1992 for herd behavior, Social Amplification of Risk Framework by Kasperson and colleagues 1988 for amplification, and Situational Crisis Communication Theory by Coombs 2007 for management, supported by Source Credibility Theory by Hovland and colleagues 1953 and Financial Literacy Theory by Lusardi and Mitchell 2014. Explanatory sequential mixed methods design per Creswell and Plano Clark 2018 was adopted with pragmatism paradigm per Saunders and colleagues 2019. Phase One surveyed 500 depositors in Lagos, Abuja and Port Harcourt using multi stage sampling, Phase Two content analyzed 500 WhatsApp and Facebook messages from January to December 2023 using participant donation method per Garimella and Tyson 2018 and code sheet based on Krippendorff 2018, Phase Three interviewed 20 risk managers, communication managers and regulators until saturation per Guest and colleagues 2006, analyzed via thematic analysis per Braun and Clarke 2006. Data analyzed using SPSS version 28 and SmartPLS version 4 per Hair and colleagues 2017 and NVivo version 12. Findings showed social media exposure beta 0.42 p less than 0.001, source credibility beta 0.31 p less than 0.001, message virality beta 0.35 p less than 0.001 significantly increased perceived risk, perceived risk beta 0.55 p less than 0.001 significantly increased panic withdrawal intention, R square 0.62. Financial literacy beta minus 0.18 p equals 0.003 and crisis communication strategy beta minus 0.22 p less than 0.001 negatively moderated relationships. Content analysis showed 60 percent WhatsApp dominance, 84 percent false messages, 76 percent emotional language, validating Rozanov 2023 argument that messaging apps drive panic in emerging markets versus Twitter focus by Cookson and colleagues 2023 in United States. Qualitative findings revealed no command center, delayed joint response, and voice notes difficulty. The study developed and validated via Delphi method per Dalkey and Helmer 1963 a five component Risk Management Model comprising early detection social listening command center, stakeholder differentiated response with influencer engagement, rapid verification protocol with concrete figures in local languages, financial literacy inoculation via pre bunking per Inoculation Theory by McGuire 1964, and joint crisis communication playbook with 2 hour rule. All five null hypotheses were rejected. The study contributes theoretically by integrating fragmented theories, methodologically by demonstrating mixed methods for encrypted platforms, and practically by providing actionable model for regulators and banks to manage high velocity panic and protect financial inclusion.
Keywords
crisis communicationbank runssocial media panicrisk management modelWhatsAppfinancial literacyemerging economiesNigeriaSituational Crisis Communication TheoryDiamond and Dybvig
References
Adetunji, O. M., & David, O. O. (2018). Financial literacy and financial inclusion in Nigeria. Journal of Economics and Finance, 9(2), 1-8.Akerlof, G. A. (1970). The market for lemons: Quality uncertainty and the market mechanism. Quarterly Journal of Economics, 84(3), 488-500. Allen, F., & Gale, D. (2000). Financial contagion. Journal of Political Economy, 108(1), 1-33. Anichebe, N. A. (2020). Corporate communication and organizational performance in selected commercial banks in South East Nigeria. Doctoral dissertation, University of Nigeria, Nsukka. Armstrong, J. S., & Overton, T. S. (1977). Estimating nonresponse bias in mail surveys. Journal of Marketing Research, 14(3), 396-402. Artavanis, N., Paravisini, D., & Sahgal, S. (2022). Social media and bank runs. Working paper, London School of Economics. Austin, L., Fisher Liu, B., & Jin, Y. (2012). How audiences seek out crisis information: Exploring the use of social-mediated crisis communication model. Journal of Applied Communication Research, 40(2), 188-207. Ajzen, I. (1991). The theory of planned behavior. Organizational Behavior and Human Decision Processes, 50(2), 179-211. Bank for International Settlements. (2011). Basel III: A global regulatory framework for more resilient banks and banking systems. Basel Committee on Banking Supervision. Bank for International Settlements. (2023). Operational resilience and social media risk. BIS Quarterly Review. Baruch, Y., & Holtom, B. C. (2008). Survey response rate levels and trends in organizational research. Human Resource Management, 47(1), 113-126. Berger, J., & Milkman, K. L. (2012). What makes online content viral? Journal of Marketing Research, 49(2), 192-205. Bikhchandani, S., Hirshleifer, D., & Welch, I. (1992). A theory of fads, fashion, custom, and cultural change as informational cascades. Journal of Political Economy, 100(5), 992-1026. Blau, P. M. (1964). Exchange and power in social life. Wiley. Braun, V., & Clarke, V. (2006). Using thematic analysis in psychology. Qualitative Research in Psychology, 3(2), 77-101. British Psychological Society. (2021). Code of human research ethics. Bryant, J. (1980). A model of reserves, bank runs, and deposit insurance. Journal of Banking and Finance, 4(4), 335-344. Bryman, A. (2016). Social research methods (5th ed.). Oxford University Press. Burrell, G., & Morgan, G. (1979). Sociological paradigms and organisational analysis. Heinemann. Central Bank of Nigeria. (2020). Risk based supervision framework. Central Bank of Nigeria. (2023). List of licensed commercial banks. Civelek, S., et al. (2023). Inoculation and financial misinformation: Experimental evidence from Turkey. Journal of Financial Literacy. Cochran, W. G. (1977). Sampling techniques (3rd ed.). Wiley. Cohen, J. (1988). Statistical power analysis for the behavioral sciences (2nd ed.). Lawrence Erlbaum Associates. Cookson, J. A., Fox, C., Gil-Bazo, J., Imbet, J. F., & Schiller, C. (2023). Social media as a bank run catalyst. SSRN Working Paper. Coombs, W. T. (2007). Protecting organization reputations during a crisis: The development and application of situational crisis communication theory. Corporate Reputation Review, 10(3), 163-176. Coombs, W. T., & Holladay, S. J. (2002). Helping crisis managers protect reputational assets: Initial tests of the situational crisis communication theory. Management Communication Quarterly, 16(2), 165-186. Corley, K. G., & Gioia, D. A. (2011). Building theory about theory building: What constitutes a theoretical contribution? Academy of Management Review, 36(1), 12-32. Creswell, J. W., & Creswell, J. D. (2018). Research design: Qualitative, quantitative, and mixed methods approaches (5th ed.). Sage. Creswell, J. W., & Plano Clark, V. L. (2018). Designing and conducting mixed methods research (3rd ed.). Sage. Creswell, J. W., & Poth, C. N. (2018). Qualitative inquiry and research design: Choosing among five approaches (4th ed.). Sage. Dalkey, N., & Helmer, O. (1963). An experimental application of the Delphi method to the use of experts. Management Science, 9(3), 458-467. Denzin, N. K. (1978). The research act: A theoretical introduction to sociological methods (2nd ed.). McGraw-Hill. Dewey, J. (1931). The development of American pragmatism. Philosophy and Civilization. Diamantopoulos, A., Sarstedt, M., Fuchs, C., Wilczynski, P., & Kaiser, S. (2012). Guidelines for choosing between multi-item and single-item scales using indirect and direct measures. Journal of the Academy of Marketing Science, 40(3), 434-449. Diamond, D. W., & Dybvig, P. H. (1983). Bank runs, deposit insurance, and liquidity. Journal of Political Economy, 91(3), 401-419. Enhancing Financial Innovation and Access. (2023). EFInA access to financial services in Nigeria survey. Etikan, I., & Bala, K. (2017). Sampling and sampling methods. Biometrics and Biostatistics International Journal, 5(6), 215-217. Ezeuduji, I. O., & Nkwo, M. (2021). Fake news and banking decisions in South East Nigeria. International Journal of Business and Social Science. Farmer, T., Robinson, K., Elliott, S. J., & Eyles, J. (2006). Developing and implementing a triangulation protocol for qualitative health research. Qualitative Health Research, 16(3), 377-394. Fisher, R. A. (1925). Statistical methods for research workers. Oliver and Boyd. Fixsen, D. L., Naoom, S. F., Blase, K. A., Friedman, R. M., & Wallace, F. (2005). Implementation research: A synthesis of the literature. University of South Florida. Fornell, C., & Larcker, D. F. (1981). Evaluating structural equation models with unobservable variables and measurement error. Journal of Marketing Research, 18(1), 39-50. Franzke, A. S., Bechmann, A., Zimmer, M., & Ess, C. (2020). Internet research: Ethical guidelines 3.0. Association of Internet Researchers. Freeman, R. E. (1984). Strategic management: A stakeholder approach. Pitman. Garimella, K., & Tyson, G. (2018). WhatApp: What does the crowd say about the WhatsApp echo chamber? arXiv preprint arXiv:1807.11045. Geisser, S. (1974). A predictive approach to the random effect model. Biometrika, 61(1), 101-107. Goldsmith-Pinkham, P., & Yorulmazer, T. (2010). Liquidity, bank runs, and bailouts: Spillover effects during the Northern Rock episode. Journal of Financial Services Research, 37(2-3), 83-98. Guest, G., Bunce, A., & Johnson, L. (2006). How many interviews are enough? An experiment with data saturation and variability. Field Methods, 18(1), 59-82. Hair, J. F., Hult, G. T. M., Ringle, C., & Sarstedt, M. (2017). A primer on partial least squares structural equation modeling (PLS-SEM) (2nd ed.). Sage. Hatfield, E., Cacioppo, J. T., & Rapson, R. L. (1994). Emotional contagion. Cambridge University Press. Henseler, J., & Fassott, G. (2010). Testing moderating effects in PLS path models: An illustration of available procedures. In V. Esposito Vinzi, W. W. Chin, J. Henseler, & H. Wang (Eds.), Handbook of partial least squares (pp. 713-735). Springer. Henseler, J., Ringle, C. M., & Sarstedt, M. (2015). A new criterion for assessing discriminant validity in variance-based structural equation modeling. Journal of the Academy of Marketing Science, 43(1), 115-135. Hovland, C. I., Janis, I. L., & Kelley, H. H. (1953). Communication and persuasion: Psychological studies of opinion change. Yale University Press. International Association of Deposit Insurers. (2021). Deposit insurance awareness survey. Ivankova, N. V., Creswell, J. W., & Stick, S. L. (2006). Using mixed-methods sequential explanatory design: From theory to practice. Field Methods, 18(1), 3-20. Iyer, R., & Puri, M. (2012). Understanding bank runs: The importance of depositor-bank relationships and networks. American Economic Review, 102(4), 1414-1445. Jackson, M. O. (2008). Social and economic networks. Princeton University Press. Kallio, H., Pietila, A. M., Johnson, M., & Kangasniemi, M. (2016). Systematic methodological review: Developing a framework for a qualitative semi-structured interview guide. Journal of Advanced Nursing, 72(12), 2954-2965. Kahneman, D., & Tversky, A. (1979). Prospect theory: An analysis of decision under risk. Econometrica, 47(2), 263-291. Kasperson, R. E., Renn, O., Slovic, P., Brown, H. S., Emel, J., Goble, R., Kasperson, J. X., & Ratick, S. (1988). The social amplification of risk: A conceptual framework. Risk Analysis, 8(2), 177-187. Kemp, S. (2023). Digital 2023: Nigeria. DataReportal. Krippendorff, K. (2018). Content analysis: An introduction to its methodology (4th ed.). Sage. Lincoln, Y. S., & Guba, E. G. (1985). Naturalistic inquiry. Sage. Lusardi, A., & Mitchell, O. S. (2014). The economic importance of financial literacy: Theory and evidence. Journal of Economic Literature, 52(1), 5-44. Lynn, M. R. (1986). Determination and quantification of content validity. Nursing Research, 35(6), 382-385. Mathew, B., Dutt, R., Goyal, P., & Mukherjee, A. (2019). Spread of hate speech in online social media. Proceedings of the 10th ACM Conference on Web Science. Mayer, R. C., Davis, J. H., & Schoorman, F. D. (1995). An integrative model of organizational trust. Academy of Management Review, 20(3), 709-734. McGuire, W. J. (1964). Inducing resistance to persuasion: Some contemporary approaches. In L. Berkowitz (Ed.), Advances in experimental social psychology (Vol. 1, pp. 191-229). Academic Press. Meyerson, D., Weick, K. E., & Kramer, R. M. (1996). Swift trust and temporary groups. In R. M. Kramer & T. R. Tyler (Eds.), Trust in organizations: Frontiers of theory and research (pp. 166-195). Sage. National Bureau of Statistics. (2022). Demographic statistics bulletin. Neuendorf, K. A. (2017). The content analysis guidebook (2nd ed.). Sage. Neyman, J., & Pearson, E. S. (1933). On the problem of the most efficient tests of statistical hypotheses. Philosophical Transactions of the Royal Society of London. Series A, 231, 289-337. Nigeria Deposit Insurance Corporation. (2022). Annual report and statement of accounts. Nigeria Inter-Bank Settlement System. (2023). Instant payments data. Nunnally, J. C., & Bernstein, I. H. (1994). Psychometric theory (3rd ed.). McGraw-Hill. Nwaeze, C., Okezie, B. N., & Madu, S. (2022). Fake news and banking decisions in Lagos, Nigeria. International Journal of Business and Social Science, 13(4), 22-31. Ogundele, O., & Akinyede, O. M. (2023). Social media misinformation and financial decisions among university students in Southwest Nigeria. Journal of Financial Counseling and Planning, 34(2), 112-125. Ogunleye, O., et al. (2021). Trust in interpersonal sources and financial decisions in Nigeria. Journal of African Business. Ohanian, R. (1990). Construction and validation of a scale to measure celebrity endorsers perceived expertise, trustworthiness, and attractiveness. Journal of Advertising, 19(3), 39- 52. Palinkas, L. A., Horwitz, S. M., Green, C. A., Wisdom, J. P., Duan, N., & Hoagwood, K. (2015). Purposeful sampling for qualitative data collection and analysis in mixed method implementation research. Administration and Policy in Mental Health and Mental Health Services Research, 42(5), 533-544. Petty, R. E., & Cacioppo, J. T. (1986). The elaboration likelihood model of persuasion. In L. Berkowitz (Ed.), Advances in experimental social psychology (Vol. 19, pp. 123-205). Academic Press. Podsakoff, P. M., MacKenzie, S. B., Lee, J. Y., & Podsakoff, N. P. (2003). Common method biases in behavioral research: A critical review of the literature and recommended remedies. Journal of Applied Psychology, 88(5), 879-903. Power, M. (2005). The invention of operational risk. Review of International Political Economy, 12(4), 577-599. Price, J. H., & Murnan, J. (2004). Research limitations and the necessity of reporting them. American Journal of Health Education, 35(2), 66-67. Rindfleisch, A., Malter, A. J., Ganesan, S., & Moorman, C. (2008). Cross-sectional versus longitudinal survey research: Concepts, findings, and guidelines. Journal of Marketing Research, 45(3), 261-279. Rogers, E. M. (2003). Diffusion of innovations (5th ed.). Free Press. Roozenbeek, J., & Van der Linden, S. (2019). The fake news game: Actively inoculating against the risk of misinformation. Journal of Risk Research, 22(5), 570-580. Rossman, G. B., & Rallis, S. F. (2017). An introduction to qualitative research: Learning in the field (4th ed.). Sage. Rozanov, A. (2023). Social media and bank runs: The role of messaging apps. BIS Quarterly Review, March 2023. Sapienza, P., & Zingales, L. (2012). A trust crisis. International Review of Finance, 12(2), 123- 131. Saunders, M. N. K., Lewis, P., & Thornhill, A. (2019). Research methods for business students (8th ed.). Pearson. Shiller, R. J. (2019). Narrative economics: How stories go viral and drive major economic events. Princeton University Press. Slovic, P. (1987). Perception of risk. Science, 236(4799), 280-285. Stone, M. (1974). Cross-validatory choice and assessment of statistical predictions. Journal of the Royal Statistical Society: Series B, 36(2), 111-147. Strauss, A., & Corbin, J. (1998). Basics of qualitative research: Techniques and procedures for developing grounded theory (2nd ed.). Sage. Sturm, J. E., De Haan, J., & De Veen, S. (2023). Banking crises and communication: The case of Credit Suisse. Swiss Journal of Economics. Tashakkori, A., & Teddlie, C. (2010). Sage handbook of mixed methods in social and behavioral research (2nd ed.). Sage. Tetteh, L. A., Agyei, J., & Adomako, S. (2021). Customer perceptions of bank crisis communication during a banking crisis in Ghana. Journal of African Business, 22(4), 512- 530. Townsend, L., & Wallace, C. (2016). Social media research: A guide to ethics. University of Aberdeen. Vosoughi, S., Roy, D., & Aral, S. (2018). The spread of true and false news online. Science, 359(6380), 1146-1151. Wardle, C., & Derakhshan, H. (2017). Information disorder: Toward an interdisciplinary framework for research and policymaking. Council of Europe. Weick, K. E. (1995). Sensemaking in organizations. Sage. Weiner, B. (1985). An attributional theory of achievement motivation and emotion. Psychological Review, 92(4), 548-573. WhatsApp. (2021). Privacy policy. Meta Platforms. World Bank. (2020). Financial inclusion and financial stability: The role of digital finance. Zhao, X., Lynch, J. G., & Chen, Q. (2010). Reconsidering Baron and Kenny: Myths and truths about mediation analysis. Journal of Consumer Research, 37(2), 197-206.
More Articles from INTERNATIONAL JOURNAL OF SOCIAL SCIENCES AND MANAGEMENT RESEARCH
Electronic Banking System and the Nigerian Banking Environment: An Empirical Review
Author: Isibor Areghan PhD, Jude Idemudia Okoh PhD, Adedoyin Ibosiola PhD, Kafidiya Olabisi, Ogunfeyimi Ruth Inumidun
Work–Life Balance and Employee Engagement in Commercial Banks in Yenagoa, Bayelsa State, Nigeria
Author: Keremah Helen Erepagamo, PhD, Kuroakegha Bio Basuo, PhD
Logistics Service Providers as Compliance Intermediaries: Reallocating Traceability Obligations in Vietnam’s Agro-Forestry Export Supply Chains
Author: Dang Thi Hien, Phan Nhat Minh
Concomitant Care: Women’s Dual Caregiving for Ageing Parents and Dependent Children in Akwa Ibom State, Nigeria
Author: Ekot, M. O. and Nkan, V.V.
Towards Assessing the Security Landscape in Contemporary Africa
Author: Agoziem Celestine, PhD